A think-tank commissioned by the government said the proposed pact could increase Taiwanese GDP by 1.65-1.72%—more if services and investment were included. In addition, it argued, the pact could increase foreign direct investment by $8.9 billion in seven years and create around 260,000 jobs (though other economists said this was too high). The president wants an outline agreement in place before ASEAN+1 comes into force, with the details worked out and implemented bit by bit after that. An incremental approach, officials say, is needed because an immediate FTA would be too disruptive to Taiwan’s economy.Fairly well balanced, though it would good if the Economist would stop claiming that annexing Taiwan to China is "returning it to the fold."
Disruptive is right, but not perhaps mainly to the economy. China still asserts that Taiwan is an integral part of the People’s Republic. Many Taiwanese, including the pro-independence opposition party, fear that the proposed accord is really a ploy by China to bring about unification by stealth. They also argue that once the pact is signed, there is no guarantee that China will not lean on members of other FTAs to keep Taiwan out anyway. In contrast, Mr Ma insists that the proposed pact would make it easier for Taiwan to sign free-trade accords with third parties.
“It is a suicidal policy that makes Taiwan locked into China,” says Huang Kun-huei, the chairman of the pro-independence Taiwan Solidarity Union. In a sign of the popular unease raised by the pact, the opposition Democratic Progressive Party, which has virtually no parliamentary clout, still managed to collect over 120,000 signatories to a petition asking the government for a referendum on it (though Taiwan’s high threshold for referendum participation means that such a thing may not get off the ground).
In fact, dramatic political shifts seem unlikely in the short term. Mr Ma has promised that when the deal is negotiated, the wording will not compromise the island’s political stance. And China-watchers think the increasingly sophisticated government in Beijing is not likely to make heavy-handed political demands in case this rebounds on Mr Ma and he is voted out of office in 2012 (the Chinese much prefer him to the independence-minded opposition). Nevertheless, in the long run China hopes that economic interdependency and goodwill will eventually encourage the island to return to the fold. The trade pact will be a test of whether that hope can be fulfilled.
UPDATE: SY has some excellent remarks in the post below on the balance of this piece.
- The Peaceful Riser(tm) spreading joy wherever it goes; a gang of 50 Chinese attack a local in Algeria for the unpardonable crime of parking in front of a Chinese-owned shop. Stay classy, Chinese people!
- Penghu's dirty power plants to close, replaced by wind. Back story: I heard from someone close to local environmental groups that Taipower opposed the wind plants until the $500 million undersea cable to supply power to the island when the wind doesn't blow was thrown into the deal. Taipower loves infrastructure.
- Chen sues the judges in his case
- Taiwan News says Taiwan should show 10 conditions of love.
- Bird's Nest Soup. You didn't know it was an industry.
- Aviation Week on the latest RAND report on China attacking Taiwan
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